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Proposed tax changes – what are the impacts?

 A wide range of proposed changes to the tax system have been proposed by the Federal Government and are likely to directly impact SMEs. We ask Saber Accountants for advice to business owners on each of the proposed changes.

Superannuation guarantee to rise from 9 per cent to 12 per cent by 2020.
As the changes will be implemented in increments of 0.25 per cent in the first two years and then by 0.5 per cent each time until the year 2020, this will give SME’s able opportunity factor in the increase in budget forecasts and staff salary packaging arrangements.

Company tax rate to drop from 30 per cent to 28 per cent from July 1 2012 for SMEs.
This reduction in the tax rate may partially offset the expected increase in superannuation guarantee obligations; however this will depend on the SME’s level of profit and labour costs. For SME’s that do not operate through a company structure, this may be a prime opportunity to review their current operating structure to assess whether changing to a company structure may in fact be more tax effective.

Depreciable assets 100 per cent write off up to $5000 from July 1, 2012.
This increase from $1000 to $5000 will result in an immediate reduction of taxable income and consequently a reduction of tax. Assets will not need to be added to depreciation schedules which will simplify administration.

Superannuation contributions cap to be increased to $50,000.
The concessional contributions cap for those people with less than $500,000 accumulated superannuation balances is set to increase. Currently the cap for people under 55 is $25,000. This is expected to increase to $50,000 by July 1 2012. This will create tax planning opportunities for many SME’s who are expecting future profits. These contributions will be tax deductible up to the cap limit and even if your bottom line is not looking that impressive at the moment, the benefits may be carried forward to offset against future profits subject to certain loss provisions.

This could present opportunities to complement your current business structure with a self managed superannuation fund.

Superannuation guarantee contribution limit to increase from 70 to 75.
This is expected to come into effect from July 1 2013 and will impact SMEs that employ people over 70 years-of-age. SMEs create opportunities by factoring these proposed changes and forward planning to achieve positive outcomes.  


Author: Jenan Thorne. Published in Gold Coast Business News, February 2011